Are you thinking long term?
There is no question that most small business owners are busy. Very busy.
This is the nature of entrepreneurship. Some, however, are overworked, constantly fighting battles and crises that always seem to come up. No time for improvement, growth, and spending extra time with or on the customer.
This usually happens because the owner or manager takes a short-term view of things. There is little or no long-term planning. Many times I have heard the lament, “I’m too busy to plan”.
Successful businesses do plan. In fact that’s why they are successful. How do you do it?
First of all you need an overall business plan. Most businesses develop one when they are starting-up or applying for a loan. It’s a good start. But then it sits in a drawer or on a disk never to see daylight again. This is bad. The business plan should be an active, living document. Comparisons of forecasted with actual accounts need to be made. If they are significantly different, why? Are the assumptions still valid? Have costs changed? Are revenue projections not met?
Being able to think long term requires a certain mindset. This is frequently difficult for the entrepreneur, who is typically action-oriented, impatient, and thinks “in the now”. There are many subjects that require some longer-range thinking.
Your employees is one of them. What are their goals? Are they looking for more responsibility? Can you structure a position to better suit them and your business? Good employees want to learn and grow. Company-provided training can help. Is it feasible to tie employee compensation to company growth? What is the plan for future employee needs?
Financing is another area where planning is required. Small business owners should develop and maintain a good relationship with their lender. This includes setting up a line of credit to have financing flexibility when funds are needed. By keeping your lender current with the development of your business, obtaining a new or increasing the old loan is easier.
One less fire to put out.
Understanding where the marketplace is headed requires planning. What are the trends for costs, the competition, your customers’ needs and wants, and government regulations? Are you active in your industry’s trade association or chamber of commerce? These organizations can help with trend analysis and forecasts. However, as the old adage goes, you get out what you put in. This is all part of the planning process.
Owners should also have an exit strategy for getting out of their business. This should start as early as five years before your planned exit date. What are the options? For a direct sale, a financial tune-up is needed to provide the highest valuation of your business. Taking on a partner takes time, as does turning it over to a solid employee that has been groomed.
Businesses need to make planning a priority and allocate time for this activity. I recommend owners spend 10% of their time on long range planning. Employees should also be involved. Annual off-site getaways can be very fruitful if properly run. Brainstorming sessions, where everyone can speak freely, can lead to many great ideas for improvement. However, these getaways can be counterproductive if the ideas generated are not acted upon. Trying new things shows that you are forward thinking and are really interested in planning and improvement.
So, start some planning and you’ll soon be putting out less fires and running a smoother operation.
This article was written by Seattle SCORE Chapter member Fred Parkinson for the Kitsap Sun in Bremerton.